Aug. 4 (Bloomberg) -- U.S. regulators want Verizon Wireless
and Comcast Corp. to limit their cooperation as a condition of
letting the largest U.S. mobile provider buy airwaves from cable
companies, three people with knowledge of the negotiations said.

Federal officials are seeking to limit the time that
Verizon and the cable companies could jointly develop new
products and services and withhold them from competitors, the
people said. The transaction proposed in December for the cable
companies’ unused spectrum also includes joint marketing and
development agreements.

Officials also want to bar Verizon Wireless from marketing
cable service in places where corporate cousin Verizon
Communications Inc. offers its FiOS high-speed Internet service,
said the people, who spoke on condition of not being identified
because confidential talks are continuing. The idea is to
preserve incentives for Verizon to maintain and build FiOS,
which competes with cable companies.

Cable providers including largest U.S. provider Comcast and
No. 2 Time Warner Cable Inc. want to sell frequencies they don’t
use to Verizon Wireless in a $3.6 billion deal. U.S. officials
are seeking conditions that would preserve competition in a U.S.
telecommunications market characterized by locally exclusive
cable companies and a wireless sector dominated by four players,
with 60.7 percent of the market held by Verizon and No. 2 AT&T
Inc.

Target Date

The Federal Communications Commission, which has an Aug. 21
target date for finishing its review, is vetting the deal along
with the Justice Department. Verizon Chief Executive Officer
Lowell McAdam in a June 28 meeting urged FCC Chairman Julius
Genachowski to approve the deal, and said the transaction would
help meet surging demand for high-speed wireless service,
according to a filing posted July 3 on the agency’s website.

The FCC, which regulates frequencies, probably will accept
the airwaves sale with few if any changes, the people said.
Verizon Wireless in June said it would sell some airwaves to T-Mobile USA Inc., and the fourth-largest U.S. wireless operator
switched from opposing the cable deal to supporting it.

The Communications Workers of America, a union that says
less competition will mean fewer jobs, said in an e-mailed
statement yesterday that the Justice Department and FCC “seem
to have lost their focus on competition.”

“This deal will allow former competitors to become
partners, will kill jobs and hit consumers with higher prices,”
the union said in its statement.

Added Conditions

According to the people with knowledge of the talks, other
conditions being sought in negotiations between regulators and
the companies include an earlier date for Comcast to be able to
market Verizon Wireless services under its own brand.

Such a requirement would aim to create fresh competition
for other wireless providers including AT&T and No. 3 Sprint
Nextel Corp. Under the companies’ agreement, Comcast can’t
market Verizon Wireless under its own name for four years and
the revised limitation hasn’t been determined, one person said.

Regulators also may seek to ensure that Comcast can market
other providers’ wireless services sooner than allowed by the
four-year prohibition set out in the companies’ agreements, the
people said.

Sena Fitzmaurice, a spokeswoman for Philadelphia-based
Comcast, declined to comment in an e-mail.

“We continue to work constructively with the FCC and DOJ
to resolve the remaining issues,” Ed McFadden, a Washington-based Verizon spokesman, said in an e-mail. “We are confident
that we will receive the necessary approvals this summer.”

Verizon Wireless, based in Basking Ridge, New Jersey, is 55
percent owned by New York-based Verizon and 45 percent-owned by
Vodafone Group Plc, based in Newbury, England.